These days Thu Huong no longer shops at the fresh produce market near her home, opting instead to hop in a taxi and head off to Aeon Co.’s 9-month-old mall in Hanoi. There, as she shops for her family of five, she can bask in the air-conditioning and enjoy free Wi-Fi.

“It’s very convenient to shop there, I can buy all the different things that my family needs for a whole week. I also feel more modern and fancy when shopping in a place like this,” said the 30-year-old dairy company employee.

With a young population, an expanding middle class and one of Southeast Asia’s fastest-growing economies, Vietnam is an alluring market for Aeon, Takashimaya Co. and Seven & i Holdings Co. The reason: China is slowing and growth is flat-lining at home.

“The Vietnamese economy is growing rapidly and its middle class is explosively expanding,” said Nagahisa Oyama, who oversees Vietnam operations as the company’s chief there. “Its retail market is growing very quickly with strong appetite for spending, especially among young people."

Young demographics

And there are plenty of them in the nation of 93 million. Almost 60 percent of Vietnam’s population are under 35 years old and are becoming better educated, according to market research company Nielsen Vietnam.

The Aeon Mall in Hanoi. Photo: Bloomberg

Four days after an Aeon Mall opened in Ho Chi Minh City July 1, it recorded sales that were 18 percent higher than originally estimated, according to the company.

Aeon, Japan’s largest retailer by sales, currently operates four malls and 54 supermarkets in Vietnam. The number of Aeon supermarkets in the Southeast Asian country is more than double the grocery stores the company’s invested in China and comprises a third of supermarkets the Japanese business has opened outside its home market.

They’re not the only Japanese firms looking to sow profits in the Vietnamese market. About 20 consumer companies from Japan -- from a chocolate maker to noodle company to a green tea manufacturer -- met with potential Vietnamese partners last Wednesday at an investment conference in Hanoi organized by Mitsubishi UFJ Financial Group Inc. and Vietnam JSC Bank for Industry and Trade.

Competition in the Vietnamese retail market will increase with Japanese convenience stores as well as Korean and Thai companies entering there.”

Japanese corporations are increasingly looking outside of the nation for growth. Aeon recorded a net loss for the March to May period, its third quarterly loss within a year as a declining and increasingly frugal Japanese population capped sales.

“We think competition in the Vietnamese retail market will increase with Japanese convenience stores as well as Korean and Thai companies entering there,” Oyama said.

The company’s tie-ups with local grocery chains Citimart and Fivimart will help expand its business, he added.

The world’s fastest-aging major nation saw its Japanese population drop the most on record, falling for a seventh straight year in 2015. By contrast, Vietnam’s young demographics is also bolstered by growing average incomes which rose to $2,111 last year compared with just $433 in 2000, according to World Bank data.

The country has nearly 9,000 wet markets, 800 supermarkets and more than a million small stores run by individual households, according to a government report in June. Spending at formal retail stores and centers, as opposed to traditional local shops, is expected to rise to 40 of consumer spending by 2020, up from 25 percent currently, the report showed.

Vietnam’s retail shift took off two years ago, aided by “both local giants and multinational companies who are accelerating their development to build solid footprint,” Roberto Butragueño, Nielsen Vietnam associate director of retail services, said in an e-mail.

Shoppers in the country are also becoming more demanding. While six in 10 Vietnamese expect stores to be within reach, nearly as many also want them to be organized in such a way that enhances the shopping experience, according to Nielsen, which surveyed 30,000 people in 61 countries.

Young population

Department store operator Takashimaya will open a 15,000 square-meter (161,000 square feet) department store in the Saigon Center in Ho Chi Minh City this month, its first in the country to tap faster-growing markets abroad especially in Southeast Asia, Tokyo-based spokesman Hironobu Hanai said.

Vietnam has nearly 9,000 wet markets, 800 supermarkets and more than a million small stores run by individual households.

Vietnam’s young population and high growth rate is attractive and Takashimaya has invested about 5 billion yen ($47 million) into the nation since 2012, including in the new store and other real estate, Hanai said.

Japanese convenience store giant 7-Eleven last year signed a franchise agreement with Seven System Vietnam as part of its expansion plan in Pacific Rim. And the interest is not limited to Japan, as Korean retail conglomerate Lotte Group targets to open 60 supermarkets in Vietnam by 2020, while Thailand’s TCC Holding Co. acquired Metro AG’s Cash & Carry wholesale business in Vietnam for 655 million euros ($720 million)

Plastic bags

Homegrown retailers are pushing back. Hanoi-based Vingroup aims to open as many as 500 supermarkets and 8,000 convenience stores under its VinMart and VinMart+ brands in the next five years, even as large retailers from overseas have "created difficulties for local companies,” the property developer said in an e-mail.

Mobile World Investment Corp., Vietnam’s top mobile-phone retailer, plans to launch grocery stores next year. This new segment is expected to grow much faster than its mobile-phone and consumer electronics retail business, Chairman Nguyen Duc Tai said in an interview.

“The market is very huge here. People change mobile phones only every two years on average while they have to buy fresh food and meat everyday,” Tai said. “Ten years ago, you see women carrying plastic bags to the wet markets to buy food every morning, but you may not see this image in the future. This is what we call ‘generation change.’”